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Amtrak Losing Millions Each Year on Food Sales

WASHINGTON — Amtrak lost more than $800 million on its food and beverage services over the last 10 years, largely because of waste, employee theft and lack of proper oversight, government auditors have found.

The railroad’s food and beverage service has never broken even since it was required by Congress to do so in 1981. The losses were the focus of a House Transportation and Infrastructure Committee hearing on Thursday that reflected partisan views over how Amtrak should be run. Republican lawmakers suggested that food services should be privatized. Democrats questioned the need for the hearing, saying the railroad was dealing with the losses.

Joseph H. Boardman, president and chief executive of Amtrak, confirmed the losses but said the railroad was taking steps to address the problem. “We are still looking for ways to improve our cost recovery,” he said.

According to audits by the Government Accountability Office, an investigative arm of Congress, and the railroad’s own inspector general, Amtrak loses about $80 million a year selling food. Since 2002, Amtrak’s food service has lost $834 million.

Amtrak said it was increasing the use of credit cards for food sales to cut down on cash thefts by employees, reducing staff, creating a better system to track inventory and to collect revenue. It has also set up a three-person loss-prevention unit.

Ted Alves, the Amtrak inspector general, testified that the bulk of the losses were on Amtrak’s long-distance routes, which account for 87 percent of the deficit. Last year, Amtrak spent $206 million in providing food services but collected only about $121 million. Long-haul routes do not include the Northeast Corridor between Boston and Washington.

“It’s an outrageous cost to taxpayers,” said John L. Mica, a Florida Republican and chairman of the House committee. “There has to be a better way. We can’t keep on paying this subsidy.”

Mr. Mica has been a frequent Amtrak critic who sponsored a bill last year that would have allowed private companies to develop a high-speed rail project on the Northeast Corridor and would have allowed competitive bids for Amtrak’s long-distance routes. He later withdrew the proposal. Amtrak’s money-losing food service has long been the focus of government studies and management vows to do better. The G.A.O. report, in 2005, said that poor management, lack of planning and enforcement of its food and beverage contract were likely causes of losses. Amtrak officials at the time acknowledged the problems and said they were making steady improvements in addressing them.

Seven years later, Mr. Alves said, part of the problem with the food service is that supervision of the business is split between two different Amtrak departments and carried out in an uncoordinated manner. Neither has established goals to reduce costs.

Mr. Alves, who issued a report on the problem last year, estimated that theft by Amtrak food service employees could cost the agency $4 million to $7 million annually. According to charts shown by Republican committee staff members during the hearing, Amtrak charges about $2 for a soft drink, but the cost to taxpayers is about $3.40 when labor is included. A $9.50 hamburger on the train costs taxpayers $16, the charts showed. Labor adds nearly 60 percent to food and beverage costs.

Dwayne Bateman, an Amtrak food service employee who testified at the hearing, called the analysis misleading. Mr. Bateman said food service workers also helped in other areas onboard, including passenger safety. “You may just see us handing out hamburgers, but we do other things,” he said.

Representative Nick J. Rahall II, Democrat of West Virginia and the ranking member on the committee, said the hearing was a not-so-veiled attempt by Republicans to get rid of Amtrak food service workers, who number about 1,200.

A version of this article appears in print on August 3, 2012, on page A12 of the New York edition with the headline: Amtrak Losing Millions Each Year on Food Sales. Order Reprints|Today's Paper|Subscribe